[Ip-health] Who Gets Saved? Hepatitis Cure at $84, 000 Makes Doctors Choose

Claire Cassedy claire.cassedy at keionline.org
Wed Jul 23 13:08:46 PDT 2014


Who Gets Saved? Hepatitis Cure at $84,000 Makes Doctors Choose

By Simeon Bennett and Robert Langreth  Jul 23, 2014 12:01 AM ET

Early this year, liver specialist Ken Flora and his colleagues sent letters
to 1,300 patients announcing exciting news: powerful new drugs to cure the
lethal hepatitis C virus were finally available.

Soon after, some patients received a different message: notices that their
health plans were refusing to pay for the $84,000 drug. So far only about
50 of the patients have received the medicine, Gilead Sciences Inc.’s

Not since AIDS drug cocktails were introduced almost two decades ago has a
medical breakthrough set up such a rush for a life-saving but expensive
therapy. Constrained by limited budgets, health insurers and government
programs are forced to make hard choices about which patients will get the
cure. Many are opting to treat only the sickest.

“No one envisioned this drug would cost so much money, so it has knocked
back everyone on their heels,” says Flora, who works at The Oregon Clinic,
a group of specialists in the Portland area.

This was supposed to be a good year for hepatitis C sufferers. Finally
there’s a reliable cure for a disease that is estimated to kill more people
than AIDS in the U.S. each year. Instead, it has been one of dashed
expectations and treatment envy.

Courtesy Gilead
Medically, it makes sense to treat as many people as possible for the
virus, before severe damage has a chance to occur. Trouble is, curing every
U.S. patient with Sovaldi and companion drugs could cost $400 billion,
assuming some people need to be retreated, according to estimates from
hepatitis C researcher Andrea Branch at the Icahn School of Medicine at
Mount Sinai in New York. That is more than the $263 billion the U.S. spent
on all prescription drugs in 2012, according to government figures.

60,000 Patients

Sovaldi has been prescribed to 60,000 patients in the U.S., according to a
report from Robyn Karnauskas, an analyst at Deutsche Bank AG. Many of them
had been on a path to liver transplants, cancer and other serious

Millions more are infected with the virus, and many who have requested the
drug are being told they will have to wait.

Mark Hebard is one of them. The 67-year-old retiree suffers from
depression, daily fatigue, muscle pain and brain fog. His insurer keeps
turning down a prescription for Sovaldi because his liver, while scarred,
doesn’t show enough damage.

Moral Aspects

“Pricing obviously is the problem at the heart of all this,” Hebard said in
a telephone interview from Aptos, California, where he lives with his wife.
“Money seems to be trumping the moral aspects.”

Photographer: Jeannette Shupp for The Oregon Clinic
Dr. Ken Flora.
Health insurers and governments are expected to pay more than $10 billion
for Sovaldi in 2014. The treatment often involves another drug, Johnson &
Johnson’s Olysio, which analysts estimate will generate $2.2 billion in
sales this year.

Sovaldi alone costs $1,000 a pill, or $84,000 for a typical 12-week course,
which has made it a flash point in the controversy over the rising price of
specialty drugs.

Seventeen tumor medicines introduced since 2009 cost more than $10,000 a
month, according to data from Memorial Sloan Kettering Cancer Center. Some
specialty medicines can go as high as $600,000 a year. Most expensive
drugs, though, are for rare genetic ailments or uncommon tumors, limiting
the budget impact. Hepatitis C, by contrast, affects at least 130 million
people worldwide.

The debate around Sovaldi’s cost pits patients’ interests against the need
to reward pharmaceutical innovation. Gilead, which got the medicine in 2011
with the $11 billion acquisition of Pharmasset Inc., says the pricing is
appropriate considering the product’s potential impact.

‘Lifetime of Benefit’

“It’s not 12 weeks of benefit. It’s a lifetime of benefit. That needs to be
taken into account,” Gregg Alton, executive vice president of corporate and
medical affairs at the Foster City, California-based drugmaker, said in an
interview. “The cure aspect of this has been lost, and the rhetoric just
focuses on the $1,000 pill.”

The company is treating some uninsured patients for free, though it won’t
disclose the exact number of people benefiting from its compassionate use
programs. It declined to comment on the cost of manufacturing Sovaldi.

Some economists say paying Sovaldi’s price now will encourage companies to
develop breakthroughs in the future.

“The goal is to improve people’s lives, not to save the insurance
companies’ money,” said William Comanor, a professor of health policy and
management at the University of California at Los Angeles.

More Effective

The Gilead drug was approved in December in the U.S. and can cure the
disease in 90 percent of patients, when used in combination with other
medicines. Older regimens had a lower success rate and many patients
suffered harrowing side effects.

In February, Flora and his colleagues at The Oregon Clinic sent out their
optimistic letter. “This is an exciting time,” they wrote, “as there are
many new medications on the horizon which are showing a strong likelihood
of successfully curing your hepatitis C.”

The quickest applicants were rewarded with approvals. By March or April,
though, “it had dawned on people how expensive these regimens were going to
be and the doors closed,” Flora said. In private, local insurers told him
they had had no idea the drug was going to be so expensive, he said.

Now Flora has mostly stopped trying to get Sovaldi for those who don’t have
liver cirrhosis or other severe complications. He tells patients they
should hang tight until new drugs become available that cost less or have
better insurance coverage.

Competing Drugs

There may not be long to wait. AbbVie Inc. could get approval for a new
multidrug treatment regimen later this year. Bristol-Myers Squibb Co. has
two hepatitis C drugs under review by U.S. regulators and Merck & Co. is in
the final stage of tests for a new hepatitis C therapy, containing multiple

For some with early disease, it may be prudent to wait for future regimens,
according to recent guidance from several medical groups. But many patients
are upset because they have already spent years waiting for a safer, better

“It is very frustrating,” Flora said. “This is a curable disease. It could
be nearly eradicated before too many people get sick.”

Instead, the toll from the infection is continuing. Flora’s clinic
diagnoses new cases of hepatitis C-related liver cancer every week.

Gilead will make big profits even if only a fraction of eligible patients
get Sovaldi. Sales of the drug were $2.27 billion in the first quarter,
putting it on target to become one of the best-selling medicines in the
world in its first year.

Silent Epidemic

When Gilead announces earnings after the market closes today, analysts
expect the company will report that Sovaldi sales reached $3 billion last
quarter, according to an average of 11 analysts’ estimates compiled by

Hepatitis C is known as a silent epidemic because it produces few symptoms
for years and many patients don’t know they are sick. It’s caused by a
virus spread through contact with infected blood, often via contaminated
needles or improper sterilization of medical equipment. About 5 percent to
20 percent of people initially infected develop cirrhosis after 20 years,
the U.S. Centers for Disease Control and Prevention said.

Because many Americans were infected decades ago, “the number of people at
the brink of developing severe damage is at an all-time high, and that is
what creates the urgency,” said Branch of Mount Sinai. “The drugs were
literally developed in the nick of time.”

Low-Income Patients

In some states, treating every hepatitis C patient on Medicaid, the
government health program for the poor, could double the entire pharmacy
budget. In Oregon, for example, the $168 million required for one-third of
the state’s Medicaid patients, accounts for almost half the state’s annual
Medicaid pharmacy budget, said Jeanene Smith, chief medical officer for the
Oregon Health Authority.

In Texas, Medicaid isn’t paying for Sovaldi or Olysio until it decides on
criteria for which patients get coverage, said Stephanie Goodman, a
spokeswoman for the Texas Health and Human Services Commission.

Imtiaz Alam, a gastroenterologist and hepatologist in Austin, Texas, has
about 40 Medicaid patients who have been denied coverage amid the
wrangling. “We are trying to help them and we are getting all these
barriers,” he said.

The people in limbo include Renee Marie Howard, a 58-year-old Austin
resident, who is in the early stages of liver failure. She got hepatitis
from a blood transfusion decades ago, failed older drug regimens and
suffers symptoms that keep in her in bed 18 hours a day.

Worsening Condition

In December, the makeup artist was thrilled when Alam told her about the
new drug. When she came back to get the treatment in May, he said the money
wasn’t there and she might have to wait another half year. This month, she
found out she had developed abnormal blood vessels in the esophagus, a
liver disease complication that can lead to severe internal bleeding.

Her doctor is now applying to try to get free drugs for her from the
manufacturers, she said.

“Always in the back of my head I hear the clock ticking. It is winding down
faster and faster,” said Howard, who had to go on Medicaid after medical
costs ate up her savings. “While I wait, I just get sicker and sicker.”

To contact the reporters on this story: Simeon Bennett in Geneva at
sbennett9 at bloomberg.net; Robert Langreth in New York at
rlangreth at bloomberg.net

To contact the editors responsible for this story: Elyse Tanouye at
etanouye at bloomberg.net Marthe Fourcade, Andrew Pollack

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